KeyBanc upgrades DuPont to 'overweight' amid lingering recession risk

Investing.com -- KeyBanc Capital Markets warned of persistent macro headwinds for the U.S. chemicals sector in a first-quarter preview, cutting 2025 EBITDA estimates across the board by 5% on average and flagging a potential 28% median downside in a recession scenario.

Even with this cautious stance, the firm upgraded DuPont (NYSE:DD) to “Overweight,” citing attractive valuation and resilient business segments.

The sector faces mounting uncertainty tied to new U.S. tariffs, weaker global demand trends, and falling prices for raw materials like ethylene and propylene.

KeyBanc said signs of slowing demand began surfacing in March and likely persisted into April, while uncertainty around tariff impacts remains high heading into earnings season.

It's too early to declare a recession priced in, analysts say. KeyBanc’s downside scenario shows several chemical names could fall more than 40% if macro conditions deteriorate further.

Still, the firm sees selective opportunity, especially in DuPont, whose shares have fallen 21% since March.

We consider DD's electronics and water businesses to be world-class secular growth franchises that rarely trade at such a discount,” KeyBanc said, noting its strong balance sheet.

A new price target of $81 implies a 12.8x 2025 EV/EBITDA multiple.

KeyBanc expects strong Q1 results from Corteva (NYSE:CTVA), Celanese (NYSE:CE), and potentially Axalta and PPG (WA:IBSP) Industries (NYSE:PPG), but sees downside risk for Dow, LyondellBasell, and Westlake due to pressure on polyethylene exports and weaker oil prices.

The firm also cautioned against leveraged M&A, urging companies to focus on capital preservation amid ongoing structural challenges.

Waiting for an upturn is an increasingly uncertain game, KeyBanc said.